Experts have called for changes to be made to the Malaysian tax collection system, as the current system is causing the country to have to play catch-up with other countries in the Southeast Asian region.
Speaking to Bernama, Malaysian University Science and Technology (MUST) economist Prof Emeritus Dr Barjoyai Bardai said that Malaysia is one of the lowest tax revenue collectors in the region, and is struggling to catch up with our neighbouring countries such as Thailand and Singapore.
Malaysia has a tax-to-gross domestic product (GDP) ratio of 11.8 percent, making it one of the lowest in Southeast Asia.
According to Dr Barjoyai, during the goods and services tax regime in Malaysia, Malaysia collected RM40 billion in taxes. However, the number has dropped to less than RM30 billion, and the revenue collected from the service sector has dropped in half.
Barjoyai also added that overall, the collection from SST is only about 15 percent from the total tax collected.
Barjoyai’s sentiment is also echoed by PwC’s Indirect Tax Leader, Raja Kumaran.
Speaking to Bernama, Raja Kumaran stated that the government will not be able to expand its tax contribution to the GDP due to the fact that the tax collection system is not fully extended across the supply chain.
He also suggested to Bernama that Malaysia start taxing health services, private education, rented commercial property and infrastructure to widen the tax base.
In total, the federal government has projected its revenue collection to grow by 1.5 percent thanks to higher tax collection, but it’s still lagging behind other Southeast Asian countries such as Thailand and Singapore.
Both Thailand and Singapore uses the GST tax system instead of the SST system that Malaysia uses.
